Comments (2)
Mark Burgess
You only need a car to move in different cities
Adrian Whittingham
Work from home is convenient.
The COVID-19 era presents a radically transformed real estate market, with preferences changing to accommodate new market realities.
With work-from-home a viable option even after the lockdown, many future homebuyers will shift to the peripheral areas for bigger homes and a better lifestyle - at more affordable prices.
The previous 'gold standard' of Indian housing - the walk-to-work / short drive to work, by definition only in and around central corporate workplace hubs - may shed some its popularity for the middle class. Central locations would retain their allure for HNI / C-suite buyers who can afford larger spaces there.
“The work-from-home concept may become the next fulcrum for homebuying decisions, where the walk-to-work option had held the longest sway," says Anuj Puri, Chairman - ANAROCK Property Consultants. "This, and millennials' new-found preference for buying rather than renting homes, are among the most prominent new residential real estate trends of the COVID-19 era. With the rise of the WFH culture, many may now prefer to live in more spacious and cost-effective homes in less central areas. While sufficient supply currently exists in most of the peripheries, this new demand will eventually also dictate fresh supply. Bigger homes, affordable prices and more generous open spaces in the peripheral areas will draw demand from tenants and buyers alike."
Central vs Peripheral Areas: The Price Difference
Apart from changing real estate consumer preferences in a strengthening WFH environment, affordability is an enduring concern especially to the backdrop of a faltering economy and job loss/uncertainty. The peripheral areas are more affordable both from a rental and purchase perspective. ANAROCK has analysed the cost difference for India's three largest economic dynamos - MMR, NCR and Bengaluru.
MMR (Mumbai Metropolitan Region)
NCR (National Capital Region)
Bengaluru
Rent vs Buy: What the Data Says
The rent vs. buy debate involves multiple highly subjective factors. However, since millennials are increasingly interested in homeownership post-COVID-19, it is worth calculating what works better for most in the current circumstances.
ANAROCK data reveals that the 5-year rental outgo for tenants living within city limits is equivalent to 27-52% of the total property cost in the peripheries of the top 3 cities (MMR, NCR and Bengaluru). Therefore, there is a strong rationale for homeownership in the peripheries. We have considered the total annual rental outgo for 5 years + 3.5% annual rental appreciation.
Also, the current home loan interest rates are at an all-time low, averaging around 7.15-7.8% - with the possibility of more reduction as the RBI recently cut repo rates even further.
You only need a car to move in different cities
Work from home is convenient.
Anuj Puri, Chairman of ANAROCK Group is a highly respected industry authority and thought leader with 30 years' experience in leveraging Indian and global real estate opportunities. His company ANAROCK has a staff complement of over 1800 qualified and experienced professional, with offices in all major markets in the country, dedicated services in Dubai and a global footprint with over 80,000 preferred channel partners.
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